South African Revenue Service the Victim as King Wins

Dave King has emerged as the victor in his dispute with the South African Revenue Service (SARS). Yes, he has to pay an eye-watering R706m to the tax authorities in addition to the R3.6m in fines after pleading guilty to 41 counts of contravening the Income Tax Act, and a further R8.75m to the Asset Forfeiture Unit. And he had to make a fairly creepy "apology”. But where he once faced a possible jail term, he now is, instead, a free man.

Even the apologetic words about how he should have co-operated sooner with SARS and how they are "approachable to any taxpayer” were not that embarrassing in truth and most people would understand they were uttered as part of a deal. This is, after all, the man who not so long ago was saying SARS was trying to extort money from him and that its pursuit of him was nothing more than a personal vendetta after he had criticised the then commissioner and now finance minister, Pravin Gordhan.

Of course, for every winner there must be a loser.

In this case it is the National Prosecuting Authority (NPA), for whom it was a pyrrhic victory. It managed to secure a deal with King to pay SARS and an admission of guilt. But at what cost to itself and its credibility?

To have fallen at the final hurdle is just more evidence of the NPA’s inability to prosecute complex financial cases. There is a growing body of evidence of its failures in this regard: the continuing case of Gary Porritt and Tigon, the unsuccessful bid to prosecute Fidentia boss J Arthur Brown, and now this.

All of which shows that if you have deep enough pockets you can string out a case against you until the state eventually folds.

But if King is the winner and the NPA the loser, SARS looks almost like a victim. It has been pursuing King for 13 years. It may have secured payment from King but it is a fraction of the R2.7bn that it initially demanded.

For SARS, this case was more than just about getting a taxpayer to pay what he owed. It was about sending a signal to the rich and powerful that they, just as much as everyone else, are not above the law. And that it would obstinately pursue those that used complex financial transactions to hide their wealth.

So while the NPA will argue that it has secured a conviction, it has in fact hung SARS out to dry.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.